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DefiningthecharitablepurposesofHerewardMedia-thenutsandboltsoftrading

The laws surrounding charities are complex, and none more so when we consider how the registered charity can be viewed in terms of its trading status. Here we explain how our business will be viewed in terms of the selling of goods and services.

In terms of our position as a charity, for information on how our activities fit in to the model of charitable purposes, documentation worth consulting can be found at the following link: Charity Trading - Selling Goods and Services

The first area to consider is described as 'primary purpose trading' - selling goods or services that directly further our charity's aims as they are stated in our objectives is known as primary purpose trading. These would include a care home charging to provide housing and care services for elderly people; a charity for the disabled selling products made by its beneficiaries; or a charitable theatre selling tickets for its production. Overall sponsorship of Hereward Television's training operation is primary purpose trading, where our donors provide support to fund training, and in return have their involvement acknowledged in publicity. Profits of this type of trading are exempt from tax, as are donations.

A charity might also sell goods or services that support its primary purpose trading - for example, selling food and drink to audience members in the cafe of a theatre. This is known as 'ancillary trading', and might be a consideration for the Hereward Television operation in the future.

Of more relevance to Hereward Television is 'non-primary purpose trading' where we can sell goods or services purely to raise funds. This kind of trading has no direct link to a charity's aims, but could include such things as selling greetings cards or similar items, or where a charitable theatre running a cafe that sells food and drink to members of the public, as opposed to audience members. Charities can carry out non-primary purpose trading if there is no significant risk that the charity could lose money from such ventures.

Charities must use a trading subsidiary for non-primary purpose trading where there's a significant risk that your charity could lose money. However, what Hereward Television is doing in terms of advertising on television, and programme sponsorship, does fall within non-primary purpose trading. This is because we do not stand a significant risk of losing money from such trading, the ancillary outputs produced for the station are effectively on a zero budget and the result of the training of our beneficiaries at no direct cost.

Our only costs are premises, heating, lighting, other electricity and equipment - most of which will be donated or funded from donations or non-primary trading income. Hence, there is nothing within this trading which exposes Hereward Television to significant financial risk. As such, we do not currently need, therefore, a trading subsidiary. Profits from this operation are also not exempt from tax.

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